CMS Transmittal R13074CP (CR 13882), § Background

A. Background: The principal diagnosis is defined in the Uniform Hospital Discharge Data Set (UHDDS)

as “that condition established after study to be chiefly responsible for occasioning the admission of the patient

to the hospital for care.” The UHDDS definitions also apply to hospice services (all levels of care). In other

words, hospices are to report the principal diagnosis on the claim as the diagnosis most contributory to the

terminal prognosis. However, the FY 2025 ICD-10-CM Official Guidelines for Coding and Reporting state,

“codes for symptoms, signs, and ill-defined conditions from Chapter 18 are not to be used as principal diagnosis

when a related definitive diagnosis has been established.”

When diagnosis codes are considered as supplementary or additional codes for reporting, they are unacceptable

to be reported as principal diagnoses. The Medicare Code Editor (MCE) and Integrated Outpatient Code Editor

(I/OCE) is used to detect claim errors, including unacceptable principal diagnosis codes. The unacceptable

principal diagnosis list is defined by the MCE and if an unacceptable principal diagnosis is reported as the

principal diagnosis on a claim, the claim is returned to the provider. Therefore, hospice providers may not report

diagnosis codes that are listed on the MCE unacceptable principal diagnosis list. The I/OCE is updated quarterly

and can be found at https://www.cms.gov/medicare/coding-billing/outpatient-code-editor-oce/quarterly-release-

files. The Data_DX10 table can be used to reference the list of diagnosis codes applicable to the MCE

Unacceptable principal diagnosis list.

Hospice providers must also follow ICD-10-CM coding conventions in the ICD-10-CM, the Tabular List and

Alphabetic Index, and official coding guidelines. For example, the ICD-10-CM has a coding convention that

requires the underlying condition be sequenced first, if applicable, followed by the manifestation. Wherever

such a combination exists, there is a “use additional code” note at the etiology code, and a “code first” note at

the manifestation code. These instructional notes indicate the proper sequencing order of the codes, etiology

followed by manifestation. An example of the etiology/manifestation convention is dementia with Parkinson’s

disease. In the Alphabetic Index, a code from category G20 is listed first, followed by code F02.80 or F02.81- in

brackets. A code from category G20- represents the underlying etiology, Parkinson’s disease, and must be

sequenced first, whereas codes F02.80 and F02.81- represent the manifestation of dementia in diseases

classified elsewhere, with or without behavioral disturbance. “Code first” and “Use additional code” notes are

also used as sequencing rules in the classification for certain codes that are not part of an etiology/ manifestation

combination.

In addition to the MCE unacceptable principal diagnosis list and the ICD-10-CM coding conventions, there are

additional diagnosis codes which are not appropriate as principal diagnosis under the Medicare hospice benefit.

For example, codes that describe “debility” and “failure to thrive” do not accurately describe the terminal illness

of a hospice patient. See section 30.3 of chapter 11 of the Claims Processing Manual for updated guidance of

non-reportable principal diagnosis codes to be returned to the providers for correction if reported.

Also, see section 40.2 of chapter 11 of the Claims Processing Manual, which provides clarification of liability

for claim denials during a hospice election when the GV or GW modifier or condition code 07 is missing from

the claim. When a beneficiary elects care under the Medicare hospice benefit, hospices are required to provide

all items and services needed for the palliation and management of the terminal illness and related conditions.

The regulations at 42 CFR 418.202 describe the covered services under the Medicare hospice benefit. Further,

the regulations at 42 CFR 418.402 state that Medicare payment to the hospice discharges an individual's

liability for payment for all services, other than the hospice coinsurance amounts described in §418.400, that are

considered covered hospice care (as described in §418.202). The individual is liable for the Medicare

deductibles and coinsurance payments and for the difference between the reasonable and actual charge on

unassigned claims on other covered services that are not considered hospice care.

For services unrelated to the terminal illness, claims are submitted with the GW modifier or the condition code

07. For services related to the terminal illness provided by the attending physician, the attending physician

appends the GV modifier. Services related to the terminal illness provided by someone other than the patient-designated attending physician are not separately payable. The patient is not liable for the charges. For services

unrelated to the terminal illness or related conditions or treatment of a non-terminal condition, claims are

submitted using either the GW modifier (professional claims) or condition code 07 (institutional claims). For

services related to the patient’s terminal illness and related conditions furnished by the designated attending

physician, claims are submitted using the GV modifier. Any claims missing the GW or GV modifier or

condition code 07 will be denied.

Lastly, see section 50, which is being updated so that chapter 11 of the Claims Processing Manual is consistent

with Federal Regulations and the Federal Register.